Big Relief to GST Taxpayers by relaxing condition of Section 16(4)

[Sandeep Saini]

It would not be wrong, if we say the recommendations made by the 53^rd GST council shows the true intent from Government side for facilitating ease of doing business.

In the meeting, GST Council addresses many important issues faced by the GST taxpayers.

One of the most important issue addressed was inadmissibility of Input Tax Credit (“ITC”) due to non availment of ITC within the time limit prescribed under Section 16(4) of CGST Act, 2017.

As per Section 16(4), ITC can be availed upto due date of filing of GSTR-3B of September month following the end of such financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

However, with effect from 1^st October, 2022 the ITC can be availed upto 30^th November instead of due date of filing of GSTR-3B of September month following the end of the financial year.

As we all know, GST came into force from 1^st July 2017 and in the initial years everyone was learning and adapting to provisions of GST.

As a result some of the taxpayers could not claim the ITC in their GSTR-3B within the time prescribed under Section 16(4).

Further, there are many taxpayers whose GST registrations got cancelled and they could not claim ITC in their GSTR-3B within the time prescribed under Section 16(4).

On this single point, the GST authorities has issued bundle of show cause notices for FY 2017-18, FY 2018-19, FY 2019-20 and FY 2020-21 and raised huge tax demands along with interest and penalty.

The taxpayers approaches the appellate authorities and Hon’ble High Courts but failed to get the relief. As a result the taxpayers were forced to pay the hefty demands just because of mere procedural lapse and faces the huge financial burden.

Thankfully, this time GST council saves the taxpayers from this menace by giving the following big relief at the right time:-

1. The time limit to avail ITC for FY 2017-18, FY 2018-19, FY 2019-20 and FY 2020-21 may be deemed to be 30^th November, 2021.
2. Where the GST registration cancelled, then time limit to avail ITC under Section 16(4) to be ignored if the return filed within 30 days of the order of revocation of GST registration.

We hope, after this relief most of the demand raised basis on this point would get dropped and huge time and cost of litigation would be saved.

We are really thankful to the GST council for addressing this important issue in this council meeting.